Financial, Government & Corporate Corruption & Cronyism

BANKING GIANT HSBC ‘A CRIMINAL ENTERPRISE’

The global banking giant HSBC is a “criminal” operation, charges a former officer for the company’s southern New York region in a video interview with WND.

John Cruz, a former vice president and relationship manager, has turned over to WND more than 1,000 pages of documents, including customer account ledgers for dozens of companies through which, he charges, the financial institution was laundering money each month.

Cruz told WND that as a relationship manager, it was his responsibility to look up various accounts in the HSBC computer system and visit the account holders in person to offer additional banking products and services.

“I pulled these documents because I thought they were evidence of suspicious activity taking place,” Cruz affirmed when presented by WND with various HSBC computer ledgers of customer accounts. “These same documents I brought to bank security and my managers in the bank.”

To his surprise, HSBC management and security did not welcome his reports of suspicious activity.

“My managers told me I was crazy and I didn’t know what I was talking about,” he said. “They told me it was none of my business what goes on in transactions. But that’s my job.”

WND showed Cruz the HSBC account ledger for a business named United Express, as seen redacted in Exhibit 1 below:

Exhibit A: United Express account ledger

“It was supposed to be a shipping company that does over $2 million a year in transactions,” Cruz said, recognizing the HSBC computer-generated account ledger. “But the ledger shows millions and millions of dollars in transaction, but the transactions are all through PayPal and American Express.”

Cruz also described his visit to see the company in person.

“There were two employees on site that didn’t speak English,” he recalled. “The only evidence of any packaging being done was a couple of small boxes in the corner.”

Suspicious activity

WND presented Cruz Exhibit B, showing a redacted HSBC account ledger for a company with over $1.34 million in deposits and $1.23 million in withdrawals in a one-month period from July 21, 2009, to Aug. 20, 2009.

Exhibit B: HSBC account ledger, monthly transaction summary

“The account does not say where the money comes from or where it is going to,” Cruz noted. “It’s just a transaction. But the money gets transferred out of the account. Where does it go? The bank won’t explain it, but they know exactly where it goes. If it from here down to Malaysia, Brazil, Columbia, Hong Kong – the bank knows exactly where it’s going because the bank owns the branches in those countries.”

Next, WND showed Cruz Exhibit C, showing an HSBC account ledger documenting hundreds of thousands of dollars transferred into and out of a company in the account statement beginning July 20, 2009, and ending Aug. 20, 2009.

Exhibit C: HSBC account ledger, detail of monthly account transfers

“Money comes in daily, thousands of dollars, always in even amounts,” he noted. “You look at a statement and it says ‘transfer,’ but where did it go? There’s no account number or tracking number that documents where the transaction went.”

Cruz contended that HSBC was running what amounted to a “shell game.”

“So many of these businesses are conducted out of a person’s home,” he commented. “I would walk into these homes. There’s a couch, there’s a chair, a desk – but the house is empty, a couple of Mercedes sitting out front, but where is the business? It’s only online transactions of money in and money out.”

Identity theft

Cruz charges that the 1,000 pages of customer account records suggest HSBC relied on identity theft to capture legitimate Social Security numbers that were then used to create the bogus retail and commercial bank accounts through which employees systematically deposited and withdrew hundreds of millions of dollars on a daily basis, apparently without the knowledge of the identity theft victims.

“When an individual finds out they got a loan they never knew about, 5 percent of that loan went to the accounting firm that made up the phony tax returns, and the other 95 percent of that loan went to the manager,” he said.

“One manager was involved in the transaction, another manager was involved in notarizing the transaction, and senior management was involved where they signed off permission to give the loans even when the loans get rejected by underwriting.”

A criminal enterprise

Cruz told WND he recorded meetings he conducted with HSBC management and bank security personnel in which he charges various bank managers were engaging in criminal acts.

“I have hours upon hours of voice recordings, ranging from bank tellers, to business representatives, to managers, to executives,” he said. “The whole system is designed to be a culture of fraud to make it look like it’s a legalized system. But it’s not.”

Cruz explained that even when he let bank managers know he was taping the conversation, the managers were not interested in what he was saying.

“HSBC is a criminal organization,” he stressed. “It is a culture of crime.”

In January, Reuters reported that the Senate Permanent Subcommittee on Investigations had begun investigating money-laundering activity at HSBC with the intention of scheduling hearings later this year.

Last week, Reuters reported the U.S. unit of the London-based HSBC Holdings Plc has been under investigation by federal law enforcement officials since 2003 for the bank’s lax attitudes toward enforcing anti-money laundering statutes.

Reuters reported that confidential documents examined from the offices of two U.S. Attorneys’ offices allege that from 2005, “the bank violated the Bank Secrecy Act and other anti-money laundering laws on a massive scale” by not adequately reviewing “hundreds of billions of dollars in transactions for any that might have links to drug trafficking, terrorist financing and other criminal activity.”